Business news 4 July 2023
James Salmon, Operations Director.
Insolvencies set to rise amid ‘perfect storm’. Factories fall further into recession territory. SMEs hindered by a lack of finance. Retailer insolvencies driven up by soaring inflation. And more business news that we thought would interest our members.
Insolvencies set to rise amid ‘perfect storm’
Sarah Rayment, co-lead of global restructuring at Kroll, says insolvencies are likely to rise amid a “perfect storm” of rising interest rates, higher costs and a slowing economy. She went on to warn that rising interest rates would make it difficult for firms to refinance debt over the coming years, saying that businesses on two or three-year facilities that traded through the pandemic may now be looking to refinance or renew facilities at significantly higher rates. Ms Rayment added: “If you’re a distressed business and you’re looking for an equity or debt injection, investors and alternative lenders have to see something that can be taken forward.” Considering the climate, she warned: “It does just feel that we’re at a very difficult time for UK corporates.”
Factories fall further into recession territory
Britain’s factories have recorded negative growth as domestic and foreign buyers reduce spending amid ongoing economic uncertainty. The S&P Global/CIPS UK Manufacturing PMI slipped to 46.5 in June from 47.1 in May on an index where a reading above 50 represents growth. June’s data means the sector has been in negative growth territory for 11 consecutive months. Rob Dobson, director at S&P Global Market Intelligence, said: “Producers are being hit by weak domestic and export market conditions with clients showing a greater reluctance to commit to spending due to market uncertainty, increased competition and elevated costs.” The PMI shows that employment fell for the ninth month in a row amid “weaker demand, redundancies and cost management initiatives.” Glynn Bellamy, UK head of industrial products at KPMG, said: “That drying up of new work from domestic and export markets, along with continued de-stocking, is holding back UK manufacturing output – threatening jobs and investment.”
SMEs hindered by a lack of finance
SMEs are struggling to access funding, with rising rates forcing banks to increase the costs of lending. Research for Manx Financial Group shows that 40% of SMEs have had to stop or pause an area of their business due to a lack of funding in recent years, with this up on the 27% who said the same last year. The poll saw 39% of SMEs say they were unable to access funding because it was too expensive. More than a third (36%) of SMEs said the process of accessing financing took too long, while 25% said banks did not understand their business. Douglas Grant, chief executive of Manx Financial Group, commented: “Our research uncovers a persistent issue that we have long been witnessing: SMEs are still facing difficulties in obtaining finance.” He added: “While many SMEs were proactive by locking their debt into fixed rate structures, it is now too late for other businesses that have borne the brunt of spiralling costs without a financial safety net.”
MPs launch inquiry into SME finance
The cross-party Treasury Committee has launched an inquiry into the challenges faced by small businesses when seeking finance. The MPs will look at issues including how easy it is for small firms to access finance and the regulation of small business lending. As part of the investigation, they will look at the Bank of England’s term funding scheme, which incentivised high street banks to lend to small businesses, and assess how useful the British Business Bank is. Committee chair Harriett Baldwin said: “Small businesses are the lifeblood of local communities, powering economic growth and fostering innovation and an entrepreneurial spirit,” adding that the committee will be “examining whether small businesses are able to access the finance they need to grow and develop, whether there is adequate regulation of the sector, and if government can take a more active role to support business growth.”
Retailer insolvencies driven up by soaring inflation
Analysis by law firm RPC show that the number of retailers entering insolvency jumped 56% in the past year, with soaring inflation and the cost-of-living crisis hitting the sector. The report shows that 1,942 retailers went bust in 2022/23, up from 1,243 in 2021/22. RPC noted that larger firms have capitalised on the increase in collapses, snapping up failed or struggling businesses. Finella Fogarty, head of RPC’s restructuring and insolvency practice, said: “Despite the challenges faced by the sector, the insolvency of financially weaker retail businesses is creating opportunities for stronger players. These businesses may be able to increase their market share through strategic acquisitions of smaller competitors.”
Recovery in business confidence comes to a ‘shuddering halt’
A recovery in business confidence came to a “shuddering halt” in June, with an Institute of Directors (IoD) survey showing that confidence last month dipped to its lowest level since December. The poll of 834 corporate leaders saw a reading of -31, down from -6 in May. Of the leaders who were pessimistic, 33% cited inflation while 19% highlighted falling customer demand. Kitty Ussher, the IoD’s chief economist, said: “The surge in optimism and investment plans we’ve witnessed in recent months came to a shuddering halt.” She added: “With business confidence in the economy plummeting, many investment plans that had only recently been dusted down are now being put on hold again as leaders consider whether the overall business environment is now too risky to be considering expansion.”
Record amount of savings withdrawn in May
Bank of England data shows that people dipped into bank and savings accounts at a record level in May, with £4.6bn more withdrawn than paid into bank and building society accounts. This marks a turnaround from April, when net deposits saw £3.7bn added to accounts. With savings held in National Savings and Investment accounts also included in the total, there was a net withdrawal of £3.8bn made from accounts in May, compared with a £5.3bn increase in April. Thomas Pugh, an economist at RSM UK, said that while people using their savings could reflect rising consumer confidence, “it seems more likely that households are using savings to pay down debt which has become much more expensive recently.” Meanwhile, MPs on the Treasury Committee have voiced concern that savings rates have not been raised in line with mortgage costs, while Chancellor Jeremy Hunt has said banks were “taking too long” to pass on increases in interest rates to savers. Banking trade body UK Finance said: “Savings rates are driven by a number of factors, not just the Bank of England’s bank rate – one key factor is whether someone wants instant access or can deposit money for a longer period of time.”
13m struggling to pay bills
The number of households struggling with heavy debt has increased by two thirds since 2017, according to charity Debt Justice. The report shows that around 12.8m adults in the UK are falling behind on bills or finding repayments a struggle. The Financial Conduct Authority’s Financial Lives survey found that 7.7m adults in the UK were over-indebted in 2017, meaning they had missed payment for credit commitments for three or more months or were finding bills a heavy financial burden. By May 2022, this had risen to 9.6m and the total hit 12.8m in January this year. Debt Justice has warned that that the cost-of-living crisis and high interest rates risk leaving people “trapped in poverty,” adding that this will hurt the economy for years to come. Heidi Chow, executive director of Debt Justice, has accused ministers of “turning a blind eye to the colossal household debt crisis that is engulfing millions of people at breakneck speed.” She added: “Instead of ignoring the problem, they need to raise incomes, boost the protections for people in arrears and write off the unpayable debts to give everyone that needs it a fresh start.”
Disposable income declines
UK households’ real disposable income – money available after adjusting for inflation, taxes and benefits – was 0.8% lower in the opening three months of 2023 than the previous quarter, according to the Office for National Statistics
Economy grew by 0.1% in Q1 – ONS
Office for National Statistics (ONS) data shows that the economy grew by 0.1% in Q1. The report, which offered a more thorough analysis of figures released in May, shows that GDP was up by 0.2% in April, having fallen by 0.3% in March.
Manufacturing vacancies increase
Figures from BDO and industry body Make UK show that there were 74,000 unfilled vacancies in the manufacturing sector last year. The report says this has created a £6.5bn economic gap and comes despite overall employment increasing in 2022. While the manufacturing sector expanded by 0.6% year-on-year in Q1, business surveys point to three consecutive months of falling output in Q2. Firms have voiced concern over high energy costs, falling export demand and recruitment struggles amid a tight labour market. Verity Davidge, director of policy at Make UK, said the industry was a vital source of levelling up but requires “bold measures.”
Vacant office space nears record high
A report from property analytics provider CoStar shows that around 105m sq ft of UK office space is currently vacant. This is an increase of 68% on the pre-pandemic level recorded in early 2020, pointing in part to the impact of the shift toward remote and hybrid working brought about by the Covid lockdowns. Mark Stansfield, CoStar’s senior director of UK analytics, estimates that the amount of empty office space will pass the 130m sq ft milestone next year, a rate that would mark a record high since such data was first collected in 2009. The national office vacancy rate is 7.6%, compared with 4.6% in March 2020. CoStar expects that figure to rise above 9% in 2024 for the first time since 2012, when it briefly hit 9.4%.
ICAEW reprimanded in rogue debt adviser case
The Government’s Insolvency Service has criticised the ICAEW over “regulatory failings” in its monitoring of Adrian Duncan, an insolvency practitioner alleged to have absconded having misappropriated nearly £4m in funds owed to creditors. This marks the first time the Insolvency Service has reprimanded an insolvency regulator for failures in overseeing a rogue practitioner. The Government said the group failed to monitor Mr Duncan’s compliance with restrictions placed on him in 2020. It said the ICAEW also “failed to take steps to ensure that estate funds … were subject to appropriate financial controls” and had “enabled or failed to prevent a risk of harm to creditors.” ICAEW chief executive Michael Izza said: “We accept that there are lessons to learn from this case. We are also implementing a series of changes to our regulatory processes to increase transparency around our proceedings.”
Car production drives up in May
Car production in Britain has increased for a fourth straight month, with data from the Society of Motor Manufacturers and Traders (SMMT) showing that 79,046 cars rolled out of factory gates in May, marking a 26.9% rise compared to May 2022. The 62,858 cars produced for foreign markets in May was a 22.9% increase on volumes recorded 12 months ago.
Average house price falls 3.5%
House prices fell by 3.5% annually in June, according to data from Nationwide Building Society, with this following a 3.4% year-on-year decline in May. Month-on-month, prices were up 0.1%, reversing the 0.1% dip recorded in May. The report shows that the average UK house price in June was £262,239. London saw a 4.3% year-on-year decline in house prices, while southern England saw a 3.8% decline and prices in northern England were down 2.7%.
Property sales slide 27%
HMRC data shows that home sales fell by 27% in May, compared with the same month last year. Across the UK, 80,020 transactions were recorded in May, with this 3% lower than April’s total.
Contractor accused of £50m tax avoidance scam
Anderson Group, a contracting business in the construction industry, has been accused of tax fraud that may have cost taxpayers at least £50m. Tax Policy Associates says the firm set up a network of 10,000 “mini umbrella companies” in 2016 in order to take advantage of tax breaks for small businesses. Workers working via the larger Anderson Group would become employees of one of these smaller companies. By doing this, the Anderson Group was able to benefit from two government incentives: the small companies’ VAT scheme and the National Insurance employment allowance. Tax Policy Associates estimates the 10,000 companies dodged £5,000 each in tax.
Threads v Twitter
Meta will launch Threads, a new text-based social-media platform to rival Twitter, later this week, on Thursday. The social media app will be linked to Instagram, allowing users to follow their Insta friends and keep the same username. The news comes just after Twitter announced a cap on the number of posts users could read in 24 hours, sparking criticism.
Apple
Tech Ttitan Apple, surpassed $3 trillion in market value for the first time as shares in the iPhone maker rose by over 50% this year. Apple was also the first company to reach $1 trillion in market value and is now worth $500bn more than rival Microsoft.
Tesla
Tesla delivered a record 466,140 cars worldwide in the last quarter end June, an 83% increase on last year, after cutting prices to boost sales.
EU inflation
Inflation in the euro zone fell to 5.5% in June, down from 6.1% in May, the slowest rate this year. But, core inflation, which strips out volatile food and fuel costs, rose slightly to 5.4%,
Latest insolvencies
Appointment of Administrator – TOWER DEMOLITION (HOLDINGS) LIMITED
Appointment of Liquidators – BLUE OCTAGON LIMITED
Appointment of Liquidators – PETAINER TOPCO LIMITED
Appointment of Liquidators – IUNIVERSE LIMITED
Appointment of Liquidators – PALMA MIDCO LIMITED
Appointment of Liquidators – WORD OF MOUTH MEDIA CATERING LIMITED
Appointment of Liquidators – CAYMAN WHITESANDS LTD
Appointment of Liquidators – OLDHAM RADIATORS LIMITED
Appointment of Liquidators – MONEY EXECS LIMITED
Appointment of Liquidators – SCARBOROUGH (UK) LIMITED
Appointment of Liquidators – KTR CONSULTING LIMITED
Appointment of Liquidators – FINLAY DEVELOPMENTS LIMITED
Appointment of Liquidators – AMBERELL LIMITED
Petitions to wind up (Companies) – FAIRWAYS HOTEL PORTHCAWL LTD
Appointment of Liquidators – HERON TECHNOLOGIES LIMITED
Appointment of Liquidators – K G AERO LIMITED
Appointment of Liquidators – W.D. CULLETON LIMITED
Appointment of Liquidators – BYNDO CONSULTING LIMITED
Appointment of Liquidators – GADUS CONSULTING LTD
Appointment of Liquidators – URBAN SPLASH EIGHT LIMITED
Appointment of Liquidators – ASHDOWN ASSOCIATES LTD
Appointment of Liquidators – JRF CONSULTANTS LIMITED
Appointment of Administrator – ILKE HOMES LIMITED
Appointment of Liquidators – MINTON PROPERTY SERVICES LIMITED
Appointment of Liquidators – NADIA IT LTD
Appointment of Liquidators – HANNAH GOODISON LIMITED
Appointment of Liquidators – THE BETTING AND GAMING CONSULTANCY LIMITED
Appointment of Administrator – ILKE HOMES LAND LIMITED
Appointment of Liquidators – C.H.D. (NORTHAMPTON) LIMITED
Appointment of Liquidators – GEL AIRPORTS LTD
Appointment of Liquidators – LATHOM PARK DEVELOPMENTS LIMITED
Appointment of Liquidators – NORMAN HAY PLC
Appointment of Administrator – ILKE HOMES HOLDINGS LIMITED
Appointment of Liquidators – ANDERSON ACCOUNTANCY SCOTLAND LIMITED
Appointment of Liquidators – ACRE 1163 (SHELL GL CORPORATE) LIMITED
Appointment of Liquidators – FURNESS WINDOWS LIMITED
Appointment of Liquidators – PIRAI SOLUTIONS LTD
Appointment of Liquidators – BOWEN STUDIOS LTD
Appointment of Liquidators – SOMETHING LOVELY LTD
Appointment of Liquidators – SCATSTA FARM LIMITED
Appointment of Liquidators – FULCRAN LIMITED
Appointment of Liquidators – SJP ESTATES LIMITED
Appointment of Liquidators – RAMAN TECHNOLOGIES LIMITED
Appointment of Liquidators – CACTUS IT LIMITED
Appointment of Liquidators – BIOGROUP LABORATORY LIMITED
Appointment of Liquidators – E-NET COMPUTERS LTD.
Appointment of Liquidators – KB PCC LIMITED
Appointment of Liquidators – NOVELITH LIMITED
Petitions to wind up (Companies) – LUX SPA WELLNESS LTD
Appointment of Liquidators – I C NET INTERNATIONAL LTD
Petitions to wind up (Companies) – THE ART OF BANKSY TOURING LTD
Appointment of Liquidators – D.A. KEENE MECHANICAL ENGINEERS LIMITED
Petitions to wind up (Companies) – RIVA CATERING GLASGOW LTD
Appointment of Liquidators – KBCI 23 LIMITED
Petitions to wind up (Companies) – IMAGE 2 OUTPUT LIMITED
Petitions to wind up (Companies) – BROADSWORD ESTATES LIMITED
Appointment of Liquidators – 10 POINT DIGITAL LIMITED
Appointment of Liquidators – ASH PARK CAPITAL LLP
Appointment of Liquidators – EBOR DEVELOPMENTS LIMITED
Appointment of Liquidators – F. GOLDSMITH & CO. LIMITED
Appointment of Liquidators – LAMRIDGE LIMITED
Appointment of Liquidators – WINSOR FURNITURE LTD
Petitions to wind up (Companies) – AIR CLIMATE LTD
Petitions to wind up (Companies) – SMARTBUILD PROPERTY LTD
Petitions to wind up (Companies) – APK DEMOLITION & REMEDIATION LTD
Appointment of Liquidators – MIRELLA CONSULTING LIMITED
Appointment of Liquidators – C WOOLLEY ROPE ACCESS LIMITED
Appointment of Liquidators – STERLING THERMAL HOLDINGS LIMITED
Petitions to wind up (Companies) – BUILDING A&M LIMITED
Appointment of Administrator – DHOKE 1 LTD
Appointment of Administrator – WILKIES LIMITED
Appointment of Liquidators – DARRY ELECTRONICS LTD
Petitions to wind up (Companies) – MOONIK LIMITED
Petitions to wind up (Companies) – LIAM BUILDS IT LTD
Appointment of Liquidators – EPIC INVESTMENTS LLP
Petitions to wind up (Companies) – PRAXIS CONSTRUCTION LTD
Petitions to wind up (Companies) – BRAND CONTRACTS LIMITED
Petitions to wind up (Companies) – RRL ACCESS LIMITED
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.